Capricorn Group delivered satisfactory results, notwithstanding the current economic conditions in which it operates. Group operating profit for the six months increased by 11.5% to N$674.3 million and group profit before tax increased by 8.5% to N$714.2 million. Following fairly flat earnings over the last two years, the group has delivered growth in headline earnings per share of 9.6% to 93.5 cents in the first half of FY2019.
Other key financial indicators are:
· Gross loans and advances increased by 12.6% to N$38.4 billion
· Net asset value increased by 5.4% to N$5.6 billion
· Non-interest income grew by 8.3% to N$636.9 million
The good growth in operating profit is due to good performance by subsidiaries delivering on their strategies, despite difficult operating environments. Bank Windhoek delivered above expectations during this period, while Entrepo made a substantial contribution to the group profit during its first six months in the group. Bank Gaborone and Capricorn Asset Management performed in line with their targets for growth and profitability. The Zambian operation has improved during the six months ended 31 December 2018 compared to the previous six months ended 30 June 2018. Sharp declines in investment income and challenging market conditions for underwriters resulted in income from associates reducing by 26.3% compared to the previous year. The group declared an interim dividend of 30 cents per ordinary share.
“The group increased net interest income by 21.5% mainly as a result of the improved net interest margins by the Namibian operations. This was offset by a decreasing net interest margin in Botswana and Zambia as a result of increased cost of funding due to liquidity pressures. Operating expenses increased 20.6% year-on-year. This increase is mainly due to the addition of Entrepo to the group (contributing 2.4% of the growth), increase in operational banking expenses as a result of higher transaction volumes (3.9% of the growth) and staff costs,
contributing to 10.1% of the growth. Staff cost increased by 18.8% which is mainly as a result of annual salary increases and filling of vacancies", said Jaco Esterhuyse, Financial Director of Capricorn Group.
“Following fairly flat results during the past two financial years during which the Namibian economy was in a recession, it is gratifying to report positive growth for the group during the period under review. The group is confident that this growth will be maintained for the remainder of the financial year as it delivers on its strategy. Beyond this financial year, in an economy that is showing signs of slow improvement, the group believes that by delivering on its strategy, diversifying its investments, continuing its focus on operational excellence and customer services through its operating subsidiaries and effectively executing the turnaround plan for Zambia, we will be able to continue delivering satisfactory results and value to all stakeholders", said Thinus Prinsloo, Group CEO.
A summary of the group's interim financial results can be downloaded on the website at 2019 Capricorn Group Interim Results.
Our interim results infographic: